[Federal Register Volume 60, Number 169 (Thursday, August 31, 1995)]
[Rules and Regulations]
[Pages 45624-45626]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21588]
[[Page 45623]]
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Part VIII
Federal Retirement Thrift Investment Board
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5 CFR Part 1653
Legal Process for the Enforcement of a Participant's Legal Obligations
to Provide Child Support or Make Alimony Payments; Interim Rule
Federal Register / Vol. 60, No. 169 / Thursday, August 31, 1995 /
Rules and Regulations
[[Page 45624]]
FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
5 CFR Part 1653
Legal Process for the Enforcement of a Participant's Legal
Obligations to Provide Child Support or Make Alimony Payments
AGENCY: Federal Retirement Thrift Investment Board.
ACTION: Interim rule with request for comment.
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SUMMARY: The Executive Director of the Federal Retirement Thrift
Investment Board (Board) is publishing interim regulations which
explain the Board's procedures for responding to legal process for the
enforcement of a participant's legal obligations to provide child
support or make alimony payments.
DATES: This interim rule is effective August 31, 1995. Comments must be
received on or before October 30, 1995.
ADDRESSES: Comments may be sent to: Patrick J. Forrest, Federal
Retirement Thrift Investment Board, 1250 H Street, NW., Washington, DC
20005.
FOR FURTHER INFORMATION CONTACT:
Patrick J. Forrest (202) 942-1662.
SUPPLEMENTARY INFORMATION: The Board administers the Thrift Savings
Plan (TSP), which was established by the Federal Employees' Retirement
System Act of 1986 (FERSA), Pub. L. No. 99-335, 101 Stat. 514, which
has been codified, as amended, largely at 5 U.S.C. 8401-8479. The TSP
is a tax-deferred retirement savings plan for Federal employees that is
similar to cash or deferred arrangements established under section
401(k) of the Internal Revenue Code. Sums in a TSP participant's
account are held in trust for that participant. 5 U.S.C. 8437(g).
Under 5 U.S.C. 8437(e)(3), payments from the TSP that would
otherwise be made to any participant ``shall be subject to legal
process for the enforcement of the individual's legal obligations to
provide child support or make alimony payments as provided in section
459 of the Social Security Act (42 U.S.C. 659).'' These regulations
explain the Board's procedures for responding to legal process for the
enforcement of a participant's legal obligations to make alimony or
child support payments.
These regulations address only legal process for the enforcement of
a participant's legal obligations to provide child support or make
alimony payments. The Board also must honor a court decree of divorce,
annulment, or legal separation or a court order or court-approved
property settlement agreement incident to such decree that expressly
awards a portion of a participant's TSP account to a spouse, former
spouse, child or other dependent of the participant, or to the attorney
for the spouse, former spouse, child or other dependent of the
participant for attorney fees. 5 U.S.C. 8467 and 8435(C). The Board
refers to these documents as ``retirement benefits court orders,'' and
regulations governing them can be found at 60 FR 13604 (to be codified
at 5 CFR part 1653, subpart A).
Regulatory Flexibility Act
I certify that these regulations will not have a significant
economic impact on a substantial number of small entities. They will
affect only internal Board procedures relating to the processing of and
payment pursuant to legal process for the enforcement of a
participant's legal obligations to make alimony or child support
payments.
Paperwork Reduction Act
I certify that these regulations do not require additional
reporting under the criteria of the Paperwork Reduction Act of 1980.
Waiver of Notice of Proposed Rulemaking and 30-Day Delay of
Effective Date
Under 5 U.S.C. 553 (b)(3)(B) and (d)(3), I find that good cause
exists for waiving the general notice of proposed rulemaking and for
making these regulations effective in less than 30 days. The Board
wishes to have these procedures in effect at the earliest possible date
in order to provide guidance to persons submitting an increasing volume
of alimony and child support garnishment orders.
Unfunded Mandates Reform Act of 1995
Pursuant to the Unfunded Mandates Reform Act of 1995, Pub. L. No.
104-4, section 201, 109 Stat. 48, 64, the effects of this regulation on
State, local and tribal governments, and the private sector have been
assessed. This regulation will not compel the expenditure in any one
year of $100 million or more by any State, local and tribal
governments, in the aggregate, or by the private sector. Therefore, a
statement under section 202, 109 Stat. 48, 64-65, is not required.
List of Subjects in 5 CFR Part 1653
Alimony, Child support, Employment benefit plans, Government
employees, Retirement, Pensions.
Federal Retirement Thrift Investment Board.
Dated: August 24, 1995.
Roger W. Mehle,
Executive Director.
For the reasons set out in the preamble, 5 CFR Chapter VI is to be
amended as set forth below:
PART 1653--DOMESTIC RELATIONS ORDERS AFFECTING THRIFT SAVINGS PLAN
ACCOUNTS
1. The authority citation for part 1653 is revised to read as
follows:
Authority: 5 U.S.C. 8435, 8436(b), 8437(e)(3), 8467, 8474(b)(5)
and 8474(c)(1).
2. Subpart B is added to part 1653 to read as follows:
Subpart B--Legal Process for the Enforcement of a Participant's Legal
Obligations to Provide Child Support or Make Alimony Payments
Sec.
1653.20 Purpose and scope.
1653.21 Definitions.
1653.22 Service of legal process.
1653.23 Requirements for ``qualifying'' legal process.
1653.24 Processing legal process.
1653.25 Payment pursuant to qualifying legal process.
Subpart B--Legal Process for the Enforcement of a Participant's
Legal Obligations to Provide Child Support or Make Alimony Payments
Sec. 1653.20 Purpose and scope.
This subpart contains regulations prescribing the Board's
procedures for responding to legal process for the enforcement of a
participant's legal obligations to make alimony or child support
payments, as required by 5 U.S.C. 8437(e)(3).
Sec. 1653.21 Definitions.
As used in this subpart:
Alimony means the payment of funds for the support and maintenance
of a spouse or former spouse. Alimony includes separate maintenance,
alimony pendente lite, maintenance, and spousal support. Alimony also
can include attorney's fees, interest, and court costs, but only if
these items are expressly made recoverable by qualifying legal process
as described in Sec. 1653.23.
Child support means payment of funds for the support and
maintenance of a child or children. Child support includes payments to
provide for health care, education, recreation, clothing, or to meet
other specific needs of such a child or children. Child support also
can include attorney's fees, interest, and court costs, but only if
these items are expressly made recoverable by qualifying legal process
as described in Sec. 1653.23.
[[Page 45625]]
Legal obligation means an obligation to pay alimony or child
support, or both, that is currently enforceable under appropriate State
or local law. A ``legal obligation'' may include currently payable, as
well as past due, alimony or child support. However, ``legal
obligation'' does not mean any future obligation to make alimony or
child support payments.
Sec. 1653.22 Service of legal process.
The Thrift Savings Plan will only review legal process for the
enforcement of a participant's legal obligations to provide child
support or make alimony payments upon receipt of that process. Receipt
by an employing agency or any other office of the government shall not
constitute receipt by the Thrift Savings Plan. Legal process should be
submitted to the Thrift Savings Plan Recordkeeper at the following
address: TSP Service Office, National Finance Center, P.O. Box 61500,
New Orleans, LA 70161-1500. Receipt by the recordkeeper will be
considered receipt by the Thrift Savings Plan.
Sec. 1653.23 Requirements for ``qualifying'' legal process.
(a) The TSP will only honor legal process if it meets each
requirement of paragraph (b) of this section and one of the
requirements of paragraph (c) of this section.
(b) Legal process must meet each of the following requirements in
order to be qualifying:
(1) The legal process must be a writ, order, summons, or other
similar process in the nature of a garnishment that is issued by:
(i) a court or competent jurisdiction within any State, the
District of Columbia, territory, or possession of the United States, or
an Indian court; or
(ii) a court of competent jurisdiction in any foreign country with
which the United States has entered into an agreement which requires
the United States to honor such process; or
(iii) an authorized official pursuant to an order of such a court
of competent jurisdiction or pursuant to State or local law; or
(iv) A State agency authorized to issue income withholding notices
pursuant to State or local law or pursuant to the requirements of 42
U.S.C. 666(b).
(2) The legal process must ``expressly relate'' to the Thrift
Savings Plan account of a current participant. This means that it must
express a clear intent to deal with the TSP as distinct from other
Federal Government retirement benefits or non-Federal retirement
benefits.
(3) The legal process must demonstrate that its purpose is to
enforce a current legal obligation of the participant to provide child
support or make alimony payments.
(c) In addition to the requirements of paragraph (b) of this
section, legal process also must meet one of the following
requirements:
(1) The legal process must require the Board to pay a stated dollar
amount from a participant's TSP account; or
(2) The legal process must require the Board to freeze the
participant's account in anticipation of an order to pay over the
account.
(d) The TSP will presume the competence or authority of any of the
entities described in paragraph (b)(1) of this section if presented
with a document from that entity that appears regular on its face.
(e) Notwithstanding paragraphs (a), (b), (c) and (d) of this
section, the following legal process will be considered nonqualifying:
(1) Legal process relating to a TSP account that contains only non-
vested money, unless the money will become vested within 90 days of the
date of receipt of the order if the participant were to remain in
Federal service;
(2) Legal process that requires an amount to be paid at the future
date; or
(3) Legal process that requires a series of payments.
Sec. 1653.24 Processing legal process.
(a) Upon receipt of a document which purports to be qualifying
legal process, the participant's account will be frozen. After an
account is frozen, no withdrawal or loans will be allowed until the
account is unfrozen. All other account activity, including
contributions, adjustments, and interfund transfers, will be permitted.
(b) The following documents will not be treated as purporting to be
qualifying legal process. Therefore, accounts of participants to whom
such orders relate will not be frozen and these documents will not be
reviewed by the Board:
(1) A document that pertains to a TSP account that has been closed.
(2) A document that does not indicate that it relates either to the
TSP or to the participant's retirement benefits.
(3) A document that does not appear to have been issued by a proper
authority as described in Sec. 1653.23(b)(1).
(c) The Board will review a document that purports to be qualifying
legal process to determine whether it is complete.
(d) If the Board determines that the document is incomplete, it
will request a complete copy of the document from the party that
submitted the document. If a complete copy is not received by the Board
within 30 days of the Board's request, the participant's account will
be unfrozen and no further action will be taken by the Board with
respect to the document.
(e) Upon receipt of a complete document, the Board will review it
to determine whether it is qualifying legal process.
(f) The Board will advise the submitting party and the TSP
participant of the determination. The Board's decision letter will
contain the following information:
(1) A statement of the applicable statute and regulations.
(2) A decision regarding whether the document is qualifying legal
process, as defined in Sec. 1653.23 (b) and (c).
(3) If the document is determined to be qualifying legal process,
the effect that compliance with the terms of the document will have on
the participant's account.
(4) If the order requires payment, the amount that will be paid
pursuant to the qualifying legal process; and to whom the payment will
be made.
(5) If the order requires payment, tax reporting and withholding
information will be sent to the party as to whom the payment will be
reported to the Internal Revenue Service as income.
(g) The Board's decision constitutes the final administrative
action by the Board. There is no appeal right within the Board.
(h) An account frozen under this section will be unfrozen:
(1) If a complete document has not been received within 30 days
from the date of a request described in paragraph (d) of this section,
upon the expiration of the 30-day period;
(2) If the account was frozen pursuant to legal process requiring
the Board to Freeze the participant's account in anticipation of an
order to pay over the account, the account will be unfrozen upon the
occurrence of any one of the following events:
(i) As soon as practicable after receipt of a complete copy of an
order vacating or superseding such order (unless the order vacating or
superseding the preliminary order itself warrants placing a freeze on
the account); or
(ii) Upon payment pursuant to the order to pay over the account, if
the Board determines that the order is qualifying; or
(iii) As soon as practicable after the Board issues a decision
letter informing the parties that the order to pay over the account is
not qualifying legal process requiring payment from the participant's
account; or
(3) If the account was frozen upon receipt of a document that
purports to
[[Page 45626]]
be legal process requiring payment from the participant's account, the
account will be unfrozen upon the occurrence of any one of the
following events:
(i) Upon payment pursuant to the document, if the Board determines
that the document is qualifying legal process requiring payment from
the participant's account; or
(ii) As soon as practicable after the Board issues its decision
letter informing the parties that the document is not qualifying legal
process requiring payment from the participant's account.
Sec. 1653.25 Payment pursuant to qualifying legal process.
(a) Payment will be made pursuant to qualifying legal process no
sooner than 30 days after the Board's decision has been issued and the
appropriate tax withholding notification has been provided.
(b) A payment made pursuant to qualifying legal process will be
made only to the persons or entities specified in the process. If
payment is to be made to the spouse or former spouse of the
participant, he or she may request that the TSP transfer all or a
portion of his or her payment to an Individual Retirement Arrangement
(IRA) or other eligible retirement plan. Such a request must be made by
filing Form TSP-13-S, ``Spouse Election to Transfer to IRA or Other
Eligible Retirement Plan'', which must be received before payment.
(c) In no case may a payment made pursuant to qualifying legal
process exceed the participant's vested account balance, excluding any
outstanding loan amount as of the end of the month preceding the date
of payment. If the amount to be paid exceeds the participant's vested
account balance (excluding any outstanding loan amount), then only the
vested amount in the account (excluding the outstanding loan balance)
will be paid.
(d) The entire amount to be paid pursuant to qualifying legal
process must be disbursed at one time. A series of payments will not be
made even if the process provides for such a method of payment. A
payment made pursuant to qualifying legal process extinguishes all
further rights to any payment under that legal process even if the
entire amount specified could not be paid. Any further payment must be
made pursuant to separate legal process.
(e) Multiple legal processes pending before the Board will be
honored as follows:
(1) As between conflicting legal processes relating to the same
spouse, same former spouse, or same children of the participant, the
Board will pay only the legal process bearing the latest date of
issuance.
(2) As between conflicting legal processes relating to two or more
former spouses or to different children of the participant, the Board
will pay the legal processes in the order of their dates of issuance
starting with the legal process bearing the earliest date and
continuing until the account is exhausted.
(f) Payment cannot be made jointly to more than one person. If
payment is to be made to more than one person, the legal process must
separately indicate the amount to be paid to each.
(g) In order to make payment pursuant to a qualifying legal
process, the TSP recordkeeper must be provided with the full name and
mailing address of the payee, even if the payment is being mailed to
another address. In addition, if the payee is a spouse or former spouse
of the participant, the payee must provide his or her Social Security
number.
(h) If the payee dies before a payment is made pursuant to a
qualifying legal process, payment will be made to the estate of the
payee, unless otherwise specified by the legal process. If the
participant dies before payment is made pursuant to qualifying legal
process, the process will be honored as long as it is received by the
TSP before payment of the account, regardless of whether the order was
received before the participant's death.
(i) A payment made pursuant to qualifying legal process in
accordance with this subpart bars recovery by any other person or
entity pursuant to that qualifying legal process.
(j) Payments made pursuant to qualifying legal process will be paid
pro rata from the TSP investment funds in which the participant is
invested, on the date as of which the payment is made. The TSP will not
honor provisions of legal process that require payment to be made from
specific investment funds.
(k) Unless the qualifying legal process specifically provides,
interest or earnings will not be paid on the amount paid to a party or
parties pursuant to the qualifying legal process.
[FR Doc. 95-21588 Filed 8-30-95; 8:45 am]
BILLING CODE 6760-01-M
